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Supply constraints and waitlists in new product diffusion

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  • David R. Keith
  • John D. Sterman
  • Jeroen Struben

Abstract

Constraints on production capacity adjustment present a strategic and operational problem for managers launching products when demand is uncertain. Stock‐outs can be costly if demand exceeds available product supply, as sales are deferred or lost when prospective customers are waitlisted. Recent research on diffusion under supply constraints has analyzed launch strategies to minimize the chance of stock‐outs. Others suggest that waitlisted buyers generate social exposure that can boost customer demand and shape the diffusion process. We develop a generalized model of new product diffusion under supply constraints that explicitly accounts for endogenous customer waitlisting and waitlist‐generated word‐of‐mouth. We estimate the model for a prominent example of waitlisting, the launch of the Toyota Prius hybrid‐electric vehicle in the U.S.A., finding evidence of positive word‐of‐mouth from waitlisted buyers. Inclusion of endogenous supply constraints and waitlisting also alters the estimated contribution of marketing and adopter word‐of‐mouth. Copyright © 2018 System Dynamics Society

Suggested Citation

  • David R. Keith & John D. Sterman & Jeroen Struben, 2017. "Supply constraints and waitlists in new product diffusion," System Dynamics Review, System Dynamics Society, vol. 33(3-4), pages 254-279, July.
    • Handle: RePEc:bla:sysdyn:v:33:y:2017:i:3-4:p:254-279
    DOI: 10.1002/sdr.1588
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    Cited by:

    1. Huang, Shupeng & Potter, Andrew & Eyers, Daniel & Li, Qinyun, 2021. "The influence of online review adoption on the profitability of capacitated supply chains," Omega, Elsevier, vol. 105(C).
    2. Jair Andrade & Jim Duggan, 2021. "A Bayesian approach to calibrate system dynamics models using Hamiltonian Monte Carlo," System Dynamics Review, System Dynamics Society, vol. 37(4), pages 283-309, October.
    3. Gökçe Esenduran & John V. Gray & Burcu Tan, 2022. "A Dynamic Analysis of Supply Chain Risk Management and Extended Payment Terms," Production and Operations Management, Production and Operations Management Society, vol. 31(3), pages 1394-1417, March.
    4. Eszter Moln'ar & D'enes Csala, 2022. "Topology-dependence of propagation mechanisms in the production network," Papers 2205.08874, arXiv.org.
    5. James Paine, 2023. "Dynamic supply chains with endogenous dispositions," System Dynamics Review, System Dynamics Society, vol. 39(1), pages 32-63, January.
    6. Sergey Naumov & David R. Keith & Charles H. Fine, 2020. "Unintended Consequences of Automated Vehicles and Pooling for Urban Transportation Systems," Production and Operations Management, Production and Operations Management Society, vol. 29(5), pages 1354-1371, May.
    7. Jeroen Struben, 2020. "The coronavirus disease (COVID‐19) pandemic: simulation‐based assessment of outbreak responses and postpeak strategies," System Dynamics Review, System Dynamics Society, vol. 36(3), pages 247-293, July.
    8. John Sterman, 2018. "System dynamics at sixty: the path forward," System Dynamics Review, System Dynamics Society, vol. 34(1-2), pages 5-47, January.

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